Shortly after Pachter's comments, Microsoft Game Studios VP
Shane Kim hinted
that a price cut was indeed in store for the Xbox 360. Kim noted that
Microsoft needed to better compete with Wii in the entry-level arena. "We
need to compete effectively for that customer and part of that is getting to
the mass market price point for the console. We definitely are working on that
area," remarked Kim.

"The timing depends on a lot of different factors and
we'll just keep evaluating those," added Microsoft's Robbie Bach.

The chatter surrounding the price cuts became deafening once
leaked sales flyers for major retailers began hitting the web. Ads for Wal-Mart
and Toy "R" Us showed the Xbox 360
Premium priced at $349. One day later, a Circuit City ad was
leaked which mirrored the $349 price for the Premium and added $449 and
$279 price tags for the Elite and Core respectively.

Today, Microsoft officially announced the price drops for
the three existing Xbox 360 SKUs. Beginning August 8, the Elite, Premium and
Core will carry an MSRP of $449.99, $349.99 and $279.99 respectively.

In addition, the previously announced Xbox 360 Halo 3
Special Edition Console will be priced at $399.99 when it hits store
shelves in September. The Halo 3-themed Xbox 360 features an HDMI port like the
more expensive Elite and an "authentic Spartan green-and-gold
finish." Microsoft also notes that the console will come with a Play and
Charge kit.